SughaVazhvu Team Learning Memo
15.232 Business Model Innovation: Global Health in Frontier Markets, Fall 2013
SughaVazhvu Team Learning Memo
Healthcare provision even in the developed world is a complex, controversial endeavor. In
developing world countries, this complexity remains, but with the added difficulty of severe
capital, personnel, and educational constraints. It is interesting, then, that some of the most
interesting and creative solutions for the provision of healthcare come from the most resourcepoor environments.
From a certain perspective, this is appropriate: because of these constraints, efficiency and
creativity are the only techniques available. There is an added sense of urgency as a
consequence of largely unavailable healthcare - many interventions are not a question of
quality of life but rather of preservation. Devi Shetty’s efforts at Narayana Health provide
further evidence that there is fat to trim from almost any effort - one simply needs to look at it
from the right angle. Where there is sufficient need, cardiac surgeons can improve their
efficiency. If it comes down to life or death, patient’s families can act as nurses, and removing
amenities like costly hospital food or air conditioning can bring costs to startling lows - less
than 10% the cost of a comparable surgery in America - while maintaining performance at key
safety and outcome statistics. It was quite impressive to learn the degree to which an operation
can be pared down and optimized.
An unfortunate consequence of these situations is that interventions and governing authorities
can often take a short-sighted approach. It was concerning to learn the difficulties that
organizations like Riders for Health have had in expanding. Riders for Health has continually
demonstrated lower costs compared to competitors and impressive statistics regarding their
ability to improve efficiency and number of patients reached, but ministries of health have
seemed unwilling to expand funding and scale fleet size. Perhaps this relates to how the
expenditures relate to health? When paying for antibiotics or vaccinations, the outcomes are
easily understood and direct: a patient who receives antibiotics is generally cured and a
vaccinated patient never gets sick in the first place. These outcomes are familiar and may
easily be assigned a fair cost. Convincing ministries of health of the value of improving
infrastructure seems much more difficult. The effects of improving mobility are so far removed
from health outcomes that however efficiently Riders for Health operates, it is difficult to
pinpoint which lives are saved and what costs are reduced. How can organizations that
indirectly influence health in important ways convince stakeholders of their importance? What
are fair metrics that are both concrete and convincing? Most importantly, how do they form a
sustainable business model that both makes money and fulfills their mission?
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SughaVazhvu Team Learning Memo
Even when fair metrics for the evaluation of business models have been established,
implementing these metrics is not always straightforward. Data collection can be challenging
and costly in low income or rural settings, especially when communication is an obstacle. It
was interesting to learn the importance of conducting baseline studies to produce a set of
‘control’ data. Avahan was innovative in its application of business thinking to health-care and
its strong focus on data collection and transparency. However, their failure to conduct baseline
studies made it challenging to evaluate the efficacy of their interventions and their overall
performance. This shortcoming is particularly significant in a setting such as India, where the
huge population ‘denominator’ makes it extremely challenging to put coverage outcomes in
perspective.
Looking back, we found several points in common among promising companies that we
learned throughout the class. Those companies which succeeded in delivering healthcare to
low-income patients in rural areas or at least in pilot markets are offering i) very cheap (locally
affordable), ii) standardized services or products iii) with simple but decent technologies and
operations. The biggest challenge is obviously located in iv) the lack of sustainable funding
models, which is caused by economic vulnerability of the patients who need the healthcare
service the most. To realize sound business cycles where healthcare providers gain sufficient
income for their services, holistic approaches are required; not only providing poor patients
with affordable healthcare service, but also offering them opportunities to have employments
for making money. In that sense, collaborations and alignments among multi-stakeholders are
inevitable for going forward.
Last, the question of ‘how good is good enough health care?’ has been a recurring
controversial question in the course of our analyses. In settings where little or no healthcare at
all is available, is ‘something’ always better than ‘nothing’? The number of physicians/medical
personnel, the availability of medications, and the accessibility of medical technologies are
obvious limiting factors in the delivery of healthcare in rural settings.
The innovative healthcare business models we have learned about in this course share one
common goal: to deliver healthcare services and products to the poor who are in desperate
need but are severely constrained financially. The initial success of some ventures is
encouraging but their impacts are quite limited unless they could scale up quickly. However,
growth requires significant funding which turns out to be a tremendous challenge to overcome.
Organic growth is extremely slow, particularly for non-profit organizations. But money in the
open market never comes free. Organizations who receive investment in the capital market are
inevitably burdened by the required return demanded by those investors. As a result, the
business model has to accommodate these “for-profit” mandates and the organizations are
forced to deviate from their original missions.
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15.232 Business Model Innovation: Global Health in Frontier Markets
Fall 2013
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